Should You Buy A10 Networks Inc (NYSE:ATEN)?

A10 Networks Inc (NYSE:ATEN), a software company based in United States, saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Let’s examine A10 Networks’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. Check out our latest analysis for A10 Networks

Is A10 Networks still cheap?

A10 Networks appears to be overvalued by 72.22% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$6.56 on the market compared to my intrinsic value of $3.81. Not the best news for investors looking to buy! In addition to this, it seems like A10 Networks’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What kind of growth will A10 Networks generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of A10 Networks, it is expected to deliver a relatively unexciting earnings growth of 9.21%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for A10 Networks, at least in the near term.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in ATEN’s future outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe ATEN should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on ATEN for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on A10 Networks. You can find everything you need to know about A10 Networks in the latest infographic research report. If you are no longer interested in A10 Networks, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.